More home owners fail to sell their properties as the market slows

Picky home buyers are passing over properties for sale that don’t tick all their boxes, leaving an increasing number of listings lingering on the market for six months or more.

Some wallflower properties struggle to find a buyer because they need a renovation, while others are too expensive for budget-conscious buyers considering the cost of their mortgage.

The number of old listings – on the market for more than 180 days – was 14.9 per cent higher nationally in August than in the same month last year, SQM Research figures show.

In Melbourne, old listings rose 9.9 per cent, while in Sydney, they rose by 5 per cent compared to a year earlier.

It comes as Melbourne home values have been edging lower and Sydney value growth has been moderating, as higher for longer interest rates reduce how much money home buyers can borrow. Melbourne’s market has also been affected by higher land taxes on secondary properties.

In Brisbane, Perth and Adelaide, where values have been rising faster, the number of old listings fell compared to a year ago as buyers competed harder for available properties.

SQM Research managing director Louis Christopher said older listings normally rise when the housing market slows down or falls into a downturn.

“[Some] vendors set an unrealistic price compared to the market for their property, and many vendors often get caught out at the top of the market because prices no longer catch up to their asking price,” he said.

“They’re left there unless they’re willing to discount their property.”

He said the rise in older listings, along with auction clearance rates and a decline in asking prices, was another indicator of a slowdown in the Sydney and Melbourne markets.

“With the rise in interest rates there has been an impact upon borrowing power,” he said. “That can definitely impact upon the number of buyers out there as well as how high they can go with the bidding.”

Christopher thought the more moderate market conditions are likely to last for the rest of the year and until the Reserve Bank cuts the cash rate.

Buyer interest is normally at its strongest in the first four weeks of a campaign, he said. If a property sits on listings websites too long, it can look stale, and buyers start to question whether there is something wrong with the home beyond its asking price that prevented someone else from buying it already.

In this market, sellers need to have an asking price close to what buyers are willing to pay, Christopher said, suggesting it could help to get an independent valuation.

Sellers who have not sold within eight to 12 weeks could be better off withdrawing the property from the market, taking a break and relisting it later with a new price, he added.

But he emphasised that although older listings have ticked up, they are not yet at high levels compared to previous downturns.

There was also a jump in older listings compared to last year in Canberra (44.6 per cent) and Hobart (31.5 per cent), other cities where home values have been edging lower.

Wakelin Property Advisory director Jarrod McCabe has noticed an increase in the number of properties taking longer to sell, such as homes that need renovation or were investment properties.

“Buyers are still cautious around dealing with trades given the uncertainty in the building industry at the moment, but the cost of carrying out works means there isn’t the same demand level,” he said.

Some homes are taking longer to sell if a vendor’s expectations are too high or have not moved with the changing market, he said. There has also been an increase in the supply of ex-rental properties for sale after the Victorian government lifted land tax for investors, meaning more competition for sellers, he said.

“If a property has been overpriced for an extended period of time sometimes even reducing might not bring buyers into the market because it does have that perception that it’s not a good property.”

In Sydney, Michelle May of the eponymous buyer’s agency has also seen more homes taking longer to sell, with some properties “not as good as the vendor thinks they are”.

“The ones that are needing a bit of a renovation, I think a lot of buyers are wary of the cost of building.”

Her clients were also careful with budgets, given the level of interest rates and risk of further hikes.

“There’s definitely pushback from buyers as well who are, ‘I’m just not prepared to pay a premium for a property that’s not worth it’,” she said.